Litigation Release No. 20660 / July 30, 2008

Accounting and Auditing Enforcement Release No. 2853 / July 30, 2008

Former Refco CEO Phillip R. Bennett Settles SEC Fraud Action

The U.S. Securities and Exchange Commission (the Commission) announced that on July 29, 2008, a final judgment by consent was entered by the United States District Court for the Southern District of New York against Phillip R. Bennett, the former Chairman and Chief Executive Officer of Refco Inc., in a civil injunctive action brought by the Commission. The final judgment permanently enjoins Bennett from violating antifraud, record keeping, periodic reporting, internal controls, and certification provisions of the federal securities laws and bars him from serving as an officer or director of a public company. The settlement concludes the Commission's civil injunctive action against Bennett.

The Commission's complaint alleged that Bennett orchestrated a fraud that periodically concealed hundreds of millions of dollars owed to Refco Inc. and its corporate predecessor, Refco Group Ltd. (together, Refco), by Refco Group Holdings, Inc. (RGHI), a private entity that Bennett controlled. The debt was primarily the result of trading losses and operating expenses that Refco transferred over time to RGHI. From at least 1998 to October 2005, the debt was concealed by short-term transactions Bennett directed that temporarily shifted the debt from RGHI to third parties at the ends of fiscal periods. The public revelation of Bennett's scheme in October 2005, two months after the company's initial public offering of common stock, caused hundreds of millions of dollars in losses to Refco shareholders. The complaint also alleged that Bennett directed practices that artificially inflated Refco's reported financial results.

The judgment against Bennett, to which he consented without admitting or denying the Commission's allegations, enjoins him from violating Section 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5, 13b2-1, and 15d 14, and from aiding and abetting violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Exchange Act and Exchange Act Rules 15d-2 and 15d-13. The judgment also bars Bennett, pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act, from serving as an officer or director of a public company.

Bennett also agreed to settle proposed administrative proceedings against him pursuant to Section 15(b)(6) of the Exchange Act and Section 203(f) of the Investment Advisers Act of 1940, to be based on the entry of the Court's final judgment enjoining him. Pursuant to his offer of settlement, Bennett consented to the issuance of a Commission order barring him from association with any broker, dealer, or investment adviser.

In a related federal criminal prosecution, on July 3, 2008, the United States District Court for the Southern District of New York sentenced Bennett to sixteen years incarceration for his role in the Refco fraud and ordered him to forfeit assets up to an amount of $2.4 billion.

The Commission acknowledges the assistance and cooperation of the Office of the United States Attorney for the Southern District of New York, the United States Postal Inspection Service, and the Commodity Futures Trading Commission.